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Zimbabwe: risks of mobile payment monopoly

Categories : Cash is a contingency and fall-back solution, Cash is trust
July 10, 2018
Tags : Mobile Payments, Mobile phone
Mobile money is practically the only payment method that is currently accessible to Zimbabwean consumers, but there are risks, and this became apparent following the 2-day breakdown of the country's largest service provider.
Viktoria Dijakovic

This post is also available in: Spanish

Because of the ongoing cash crisis in Zimbabwe, many consumers have turned to mobile payments. Back in 2016, the government made an attempt to curb the crisis by issuing bond notes and making the US dollar the country’s official currency, but bonds are increasingly hard to come by and ATMs are chronically running dry.

It is no surprise that mobile payments have gained so much ground the past couple of years, with EcoCash – Econet Wireless’ mobile money platform – being by far the most popular. Indeed, billionaire Stirve Masiyiwa’s company has the largest market share, serving over 8 million users and accounting for $23 billion transactions in the past six years.

It’s when things go wrong that questions about dependency on one provider arise, as the case with UK’s recent Visa crisis clearly demonstrates. A similar scenario happened in Zimbabwe beginning of July where EcoCash’s mobile payments system came to a complete halt for two days, literally crippling the African country’s already fragile economy.

Writing for Quartz, journalist Tawanda Karombo states “Like with big digital platforms such as social media or content providers, a so-called “network effect” tends to give the leading mobile money provider additional advantages and efficiencies over rivals, making them only stronger. This has been seen with the success of Safaricom’s M-Pesa mobile money platform in Kenya where it has over 80% market share.” Yet, this also comes with greater risks for society as options become scarcer, especially in a country like Zimbabwe where access to cash is practically impossible.

President Emerson Mnangagwa suggested a possible reissuance of the Zimbabwe dollar before elections at the end of this month, but this remains to be seen. It would be wise for Zimbabwe to work on the reinstatement of a local currency because, although mobile payment penetration might be similar to Kenya’s, the radical difference is that Kenyans can – and do – cash out when money is received on the other end, maintaining an effective and reassuring measure against system breakdowns. In Zimbabwe, on the other hand, there is nothing to cash out with, leaving consumers vulnerable and businesses helpless in the event of a network crash.


This post is also available in: Spanish